14 November 2018

Rwanda Foresees More Revenue With Automation

Kigali plans to fully automate clearance of exports and imports as it seeks to boost domestic revenue collection and significantly cut cargo clearance time, thus reducing international trade costs and increase the flow of taxable goods.

The move comes at a time when Rwanda is under pressure to boost its domestic revenue collection to finance its budget deficit, estimated at 4.9 per cent of GDP -- as foreign aid falls.

As part of the new tax administration measures, the Rwanda Revenue Authority announced that Customs advance decisions -- data Customs official use to arrive at tariffs is to be automated -- can be provided at the request of the trader at any time.

Automation saves clearing agents time spent searching for the information to verify that the tariffs Customs officials arrived at are correct.

Furthermore, the RRA is also to fully automate the Authorised Economic Operators (AEO), programme conceived by the Commissioners of Customs of the East African Community in 2006.

Under this programme, compliant traders are given AEO status, which means they are low risk companies and trusted by Customs.

According to experts, this implies that Customs can handle the consignments of such companies using fewer controls. That way, the EO programme becomes an instrument for growing compliance.

However, the beneficiaries of the programme are compelled to present their AEO status papers in other countries in the region for vetting if they are to be accorded preferential treatment.

At the Kigali International Airport, a cargo community system, that facilitates verification of consignments using a single portal for all agencies is to be introduced, doing away with multiple checks for security, clearing agents, cargo handling personnel, standards body and Customs subject to cargo.

Other plans

Also planned is a single e-portal for traders to interact with the trade agencies. The current practice is for traders to seek export application and licensing of commodities from multiple agencies.

These tax administrative measures, according to experts, could further cut the average clearing time for imports through Customs to less than a day, from 34 hours to one-and-a-half half days in 2014.

The export clearance times could also fall from 34 hours or 1.5 days, to less than 12 hours.

"These projects will enable RRA to establish a true paperless trade environment in Rwanda. It will enhance its ability to network globally with other Customs administrations and the trading community," said Patience Mutesi, TradeMark EastAfrica's Rwanda country manager.

TradeMark East Africa is to invest $1.57 million (Rwf1.4 billion) in the next four years to upgrade Rwanda's Electronic Single Window and Authorised Economic Operator Programme to ensure that the trade environment in Rwanda becomes more competitive and attractive to investors from around the world.

"This programme will improve our international traders' access to better services from RRA, improves transparency and reduce their cost of doing business in the country.

"TradeMark is glad to be associated with RRA in this initiative and we shall also provide technical support to the programme where necessary," said Ms Mutesi.

The earlier automation through the rollout of the Rwanda Electronic Single Window (ReSW) and Authorised Economic Operators project has been a boon to the Rwanda economy.

An independent evaluation of ReSW, which was commissioned by TradeMark in 2016, shows that the Rwanda economy could save from $15 million-$20 million annually if the economic benefit of time savings in clearance and the reduction of cargo clearance costs is factored in.

High costs

However, despite the early gains of automation, trade experts say micro and small business exporting and importing goods still face high costs and spend longer hours at Customs.

While the 2019 World Bank Doing Business Survey ranks Rwanda among the economies that have for years been consistently improving the business environment through regulation, it scored poorly in the facilitation of cross-border trade.

According to the survey, Rwanda ranked 88 out of 190 countries surveyed. The report says traders spend $696 on import and export documentation and compliance with Customs rules.

The traders also have to wait five days before a consignment is delivered at the ports of Mombasa and Dar es Salaam.

These delays, say experts, translate into increased costs in the form of parking fees, demurrage, warehousing rent and storage and other related costs.

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